World stocks slide as US growth data disappoint

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World stocks turned lower on Friday after official data showed the U.S. economic recovery was not as fast as many had hoped.

The Commerce Department said that the U.S. economy, the world's largest, grew at a modest 2.8 percent in the final three months of last year. While that is the fastest growth in 2011, economists had expected growth of 3 percent.

A cut in government spending was offset partly by a rise in inventories, which are expected to slow back down in the early months of 2012, hurting growth. After that, "growth will pick up again by late spring," said Harm Bandholz, chief U.S. economist at UniCredit Bank.

With the data suggesting the U.S. recovery would continue to be a slow process, investors sold off stocks to cash in on gains made so far this month.

Britain's FTSE 100 was down 1.1 percent to 5,733 while Germany's DAX fell 0.4 percent at 6,511.98 and France's CAC-40 lost 1.3 percent to 3,318.76. The euro was up 0.83 percent at $1.3189.

Wall Street edged lower on the open — the Dow Jones industrial average fell 94 points to 12,639 and the S&P 500 5.8 points to 1,312.

Other economic and corporate news released Friday contributed to sour market sentiment.

In Europe, traders digested grim statistics from Spain showing more than 5 million people without jobs. The National Statistics Institute said the jobless rate shot up from 21.5 percent — already the highest in the eurozone — to 22.8 percent in the fourth quarter.

Attention was also focused on the resumption of talks to reach a deal on how Greece can avoid a catastrophic default on its debt. Greece and its bailout rescuers — other countries that use the euro and the International Monetary Fund — are asking private creditors to swap their Greek bonds for new ones with a lower value, interest rate and much longer maturity.

The two sides have so far disagreed over what interest rate the new bonds should take. Some negotiators have said they hope to have a deal this weekend, in time for a European leaders' meeting on Monday.

While investors appear to expect a deal at some point — the euro was up and eurozone borrowing rates were down, suggesting a steady increase in confidence — some worried that the crisis was far from over.

Portugal's markets have worsened in recent days on fears that its austerity efforts will not be enough to achieve its deficit-reduction targets and that it may end up like Greece, needing a second bailout effort and possibly a debt writedown.

Getting economies like Portugal to grow is fast becoming a priority and is expected to be one of the main topics of discussion at the European leaders' summit in Brussels on Monday.

Earlier in the day, Asian markets showed little momentum ahead of the weekend.

Japanese exporters continued to be hit by a strong yen, which reduces the value of repatriated profits. The dollar fell to 76.81 yen from 77.49 yen.

Nintendo Corp., the Japanese gaming giant behind the Super Mario and Pokemon games, plummeted 4.1 percent, a day after it lowered its annual earnings forecast to a 65 billion yen ($844 million) loss. The company blamed the strong yen for much of the loss.

Japanese electronics company NEC Corp. plummeted 7.1 percent after announcing Thursday that it was slashing 10,000 jobs worldwide and would slide into the red for the full year.

Benchmark oil for March delivery was up 5 cents at $99.75 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 30 cents to finish at $99.70 per barrel on the Nymex on Thursday.